Two brothers and co-owners of Tuskys Supermarkets were Wednesday charged with theft of Sh1.64 billion from the retail chain, opening a new chapter in the decade-long sibling fight for control of the company.
Stephen Mukuha and George Gachwe were charged with five counts of theft and set free on a cash bail of Sh1 million or Sh3 million bond each.
The prosecution accused Mr Mukuha and Mr Gachwe of stealing the money “on diverse dates between 2002 and 2012, jointly with others not before the court”.
The two brothers are said to have come across the money by virtue of their employment at Tuskys where they also served as directors.
Mr Mukuha and Mr Gachwe, who own 17.5 per cent of the retailer each, are alleged to have committed the crime, with the assistance of unnamed parties, over a period of 10 years following the death of their father, the Tuskys’ founder, in 2002.
Police said the money was stolen in five tranches of Sh400 million, Sh279 million, Sh200 million, Sh322 million and Sh441 million from the Tuskys head office on Nairobi’s Mombasa Road.
Their arraignment was the culmination of an investigation that began in February 2012 when the duo’s brother Yusuf Mugweru raised the alarm over the theft of funds from the retail chain’s accounts.
Mr Mugweru’s action caused deep division in the wealthy family that has since pulled in the third generation heirs and sparked private and public spats — including the recent forceful ejection from office of the retail chain’s chief executive, Dan Githua.
Attempts to reconcile the warring parties have flopped, leading to yesterday’s pressing of criminal charges against the two brothers.
Saibabo Kanchori, the lawyer representing Mr Mukuha and Mr Gachwe, yesterday notified the court of the ongoing feud in the family while arguing for the accused’s release on bail.
“The complainants in the case are brothers of the accused persons who have had a tussle for control of the business,” said Mr Kanchori, adding that the case is “an extension of family feuds”.
Mr Kanchori claimed no money had been stolen from the retail chain as alleged, and that the charges against his clients were framed to influence the bond terms and to prevent the accused from participating in the running of the business.
Prosecutor Eddie Kadebe, however, dismissed the claims, insisting that the Sh1.64 billion reflected in the charge sheet was the amount that the investigators established to have been stolen from the retail chain.
The battle for the control of Tuskys started when Mr Mugweru accused his two co-directors of using related companies and subsidiaries such as Enkarasha, Magic Pay and Ndykak Investments to irregularly draw Sh1.6 billion from the retail chain.
The brothers were also accused of attempting to subvert the course of justice by converting the three companies into subsidiaries of Tuskys and the money used to set them up into loans.
Mr Mugweru had in 2012 demanded to see the register and bank counts of all Tuskys subsidiaries, an audit of the company’s books, the firing of the accused directors and the recruitment of a professional as chief executive to run the business.
Mr Mukukha (the third born) was at the time the retail chain’s managing director while Mr Gachwe (the fifth born) was the purchasing manager.
The criminal investigators picked up Mr Mugweru’s fraud claims and commenced investigations, including a search at the retail chain’s headquarters.
The accused brothers in November 2013 unsuccessfully tried to block the investigations on grounds that the search warrant was not issued procedurally.
“The warrants were issued to enable investigations over allegations of fraud and whether they will unearth material upon which criminal prosecution can be initiated is premature,” Justice George Odunga said when throwing out their plea.
The matter has for years been pending at the Directorate of Criminal Investigations headquarters after the siblings were instructed to settle the matter out of court.
The negotiations, which at one point saw Nakumatt’s chief executive act as one of the mediators, have, however, not borne fruit as the opposing camps refused to unclench their fists.
The family feuds emerged once again in May 2015 when Mr Githua was appointed Tuskys’ chief executive and introduced by John Kago, the retail chain’s chairman and the family’s eldest sibling.
Mr Mugweru immediately rejected the choice, disowning claims that Tuskys shareholders had met and agreed to put the business in the hands of a professional manager.
Mr Mugweru accused Mr Mukuha of handpicking Mr Githua as part of a scheme to hoodwink other directors that the business was in the hands of a professional while in real sense remaining under his control. The chief executive had previously worked under Mr Mukuha as Tuskys internal audit manager.
Mr Mugweru was at the time seeking support from his siblings, including from his nieces and nephews who recently stormed Tuskys headquarters to eject Mr Githua from office.
Mr Kago, who owns 10 per cent of the company, in 2012 openly sided with Mr Mugweru while pointing an accusing finger at his two brothers but he has since taken up a more neutral position in the ongoing battle for control of the business.
While some Tuskys family members remain keen on keeping their business away the public limelight, the criminal case against the two brothers will do the exact opposite.
Worse still, the case, which will be heard on July 12, seems set to reinforce hostilities among the siblings who have been feuding since their father’s death 14 years ago.